New hires to receive change in retirement benefit

New 401(k)-only benefit provides greater participant control, supports long-term sustainability of current system

TVA has approved amendments previously approved by the TVA Retirement System (TVARS) board of directors in favor of a change to the TVA retirement benefit for new employees.

Employees who become members of the Retirement System on or after July 1, 2014, as well as any former TVA employees who are rehired and become members of the Retirement System again on or after July 1, 2014, but who were previously not vested or who previously received their pension benefit in a lump sum distribution, will be eligible for a defined contribution retirement benefit as participants in the 401(k) Plan only. They will not be eligible to participate in the defined benefit plan (Cash Balance Benefit Structure).

This change does not impact current employees or retirees, except in the rehire situation described above.

The defined benefit plan for current employees and retirees—Original or Cash Balance—has not been changed. The provisions of their 401(k) plan will also remain unchanged, including maximum matching contributions from TVA of 1.5 percent of base compensation for those in the Original defined benefit plan, and 4.5 percent for those in the Cash Balance defined benefit plan.

For those employees who are eligible to participate in the new 401(k)-only plan, TVA will provide an automatic, non-elective contribution equal to 4.5 percent of base compensation. In addition, TVA will contribute 75 cents to a matching account for each dollar contributed on a before- and/or after-tax basis, with maximum matching contributions of 4.5 percent of base compensation. Therefore, if an employee contributes at least 6 percent of their base pay then they will receive a 9 percent total contribution from TVA for a total savings/deferral rate of 15 percent.

Benefits of the Change

For new employees

The new defined contribution retirement benefit is competitive, portable and allows participants greater control in managing their retirement investment. Participants may direct the investment of contributions within the 401(k) Plan and may also have rollover options available to them should they separate from TVA.

For current employees & retirees

Discontinuing new employees’ eligibility to participate in the Cash Balance Benefit Structure is a step that TVA and the TVARS board believe will contribute to the long-term sustainability of the Retirement System by helping to control future liability risks and accruals in the defined benefit plan.

Employees who have questions about this change can call or e-mail the TVA Retirement System (e-mail: retsvcs@tva.gov; phone: 632-2672, 1-800-824-3870).

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